On Wednesday, Tidjane Thiam will probably reveal a strategy to prune Credit Suisse’s investment bank in favor of wealth management.
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It also highlights the broader moves under way at a number of banks, as they grapple with increasingly stringent regulation, muted growth and testing market conditions.
Other major banks have already set up operations in locations that are cheaper and often more attractive for IT and back-office staff. Citigroup for instance has IT hubs in San Francisco and Israel; JPMorgan has sites in Delaware on the USA east coast and in Bournemouth, on Britain’s south coast. Third-quarter pretax income fell 34 percent to 861 million francs, primarily reflecting an 8 percent drop in net revenue.
Credit Suisse shares fell as much as 4.5 percent and by 0930 GMT were down 2.9 percent.
Mr. Thiam acknowledged the lackluster numbers for the most recent period, while touting the potential for his planned revamp. A key element, he said, is “to resolve the capital issue for good”.
“We have delivered that”, he added, during remarks to reporters.
Along with a cash call to investors, Thiam is expected to signal more explicitly that private banking and wealth management will be a central priority. It will also initiate a cost-cutting plan aimed at saving 3.5 billion francs by the end of 2018. He said the results included a “resilient performance” in its Asian business.
Credit Suisse (NYSE:CS) traded up 0.78% during midday trading on Tuesday, hitting $25.96.
However, the macro business has been a relatively small part of the overall investment bank, said Nomura analyst Jon Peace.
Thiam said the bank’s common equity capital adequacy ratio should rise to 12.2 percent of risk-adjusted assets, and the bank aims to keep that ratio above 12 percent.
“A bit of cost cutting, a bit of downsizing of investment banking, a bit of reorganisation and, in order to pay for it, raise capital – that would be very disappointing unless he pulls a rabbit out of the hat”, said Becker, who has a “reduce” rating on the stock and a 22.50 franc target price.
Credit Suisse was ranked as the fourth-largest wealth manager in the world a year ago by Scorpio Partnership, a few notches behind market leader UBS.
Credit Suisse said it plans an initial public offering for the Swiss unit by the end of 2017. “We would like to act as an aggregator”, he said.
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Along with the proposed strategy shift, the executive board of the bank will also undergo change. Those leaving include, chief marketing Officer Pamela Thomas-Graham, Gael de Boissard as well as private banking and wealth management co-heads Hans-Ulrich Meister and Robert Shafir.
